A Strategic Location Decision-Making Approach for Multi-Tier Supply Chain Sustainability

Abstract

Few studies on supply location decisions focus on enhancing triple bottom line (TBL) sustainability in supply chains; they rarely employ objective quantifiable measurements which help ensure consistent and transparent decisions or reveal relationships between business and environmental trade-off criteria. Therefore, we propose a decision-making approach for objectively selecting multi-tier supply locations based on cost and carbon dioxide equivalents (CO2e) from manufacturing, logistics, and sustainability-assurance activities, including certificate implementation, sample-checking, living wage and social security payments, and factory visits. Existing studies and practices, logic models, activity-based costing, and feedback from an application and experts help develop the approach. The approach helps users in location decisions and long-term supply chain planning by revealing relationships among factors, TBL sustainability, and potential risks. This approach also helps users evaluate whether supplier prices are too low to create environmental and social compliance. Its application demonstrates potential and flexibility in revealing both lowest- and optimized-cost and CO2e supply chains, under various contexts and constraints, for different markets. Very low cost/CO2e supply chains have proximity between supply chain stages and clean manufacturing energy. Considering sustainability-assurance activities differentiates our approach from existing studies, as the activities significantly impact supply chain cost and CO2e in low manufacturing unit scenarios.